Shareholders of Cigna Corp voted to allow the company to acquire the pharmacy benefit manager Express Scripts Holding Co for $52 billion. However, the health insurer’s acquisition would still have to go through clearance from antitrust authorities.
The voting by the shareholders were completed on anticipated lines following the walking away of activist investor Carl Icahn form his attempts at the 11th hour to get together shareholders of company to reject the deal.
The acquisition is still being subjected to an antitrust review by the U.S. Department of Justice and that exercise is not expected to close until later this year.
The health insurer said that about 90 per cent of the shareholders voted in favor of the acquisition according to the preliminary results.
The merger is expected to be closed by the end of the current year according to Cigna.
The reason behind the acquisition of Express Scripts by the insurer, as disclosed in March be the company, was that the combination of the two companies would reduce the costs of healthcare for its clients if the company was able to better coordinate medical care with prescriptions.
However, since that announcement, there have been increasing criticism of Express Scripts from various people in the Trump administration, lawmakers and drug makers, accusing the company of being the middleman which increases the costs of drugs. The argument that Icahn put forward while asking shareholders to reject the deal was that Cigna was paying more for Express Scripts because of the prospect of reduced profits.
The activist investor had backed down from his stance after shareholder advisory groups advised shareholders to vote in favor of the deal.
The deal was also approved by the shareholders of Express Scripts where about 78 per cent of outstanding shares of Express Scripts voted for the deal.
The Cigna’s plan for the acquisition of Express Scripts happens at a time when one of the main rivals of Express Scripts – CVS Health and Aetna Inc are going ahead with a merger of their own. Cigna’s deal to be bought by Anthem Inc fell apart last year after it failed to pass antitrust review.
Cigna shares dropped by 0.10 percent, while Express Scripts increased by 0.47 percent.
(Adapted from Reuters.com)